- Create a watch list. Start a list of important stocks or bonds that you want to keep track of on a daily or weekly basis. This may include areas of your portfolio that you want to gain exposure to or even large holdings that you want to keep a sharp eye on. A well maintained watch list will ensure you always have fresh ideas in the event an opportunity such as a swift correction in the market arises. My own watch list includes the major indices alongside a lengthy list of individual sector ETFs in nearly every asset class.
- Write down your investment plan. No one really sees the important of having defined rules or a workable process when the market is relatively calm. Trust me: the time for preparation is before the shit hits the fan, not after. You don’t want to be the person who touts what a great indexer they are until that 12% correction hits and they capitulate by selling everything at the low. I’ve seen it happen and it’s not pretty. Put pen to paper on what investment tools you will use, what guidelines will trigger a buy or sell, and what your preferred method will be for dealing with stressful situations in the market. It’s only a matter of when, not if they happen.
- Organize and execute your strategy. There is only so much planning, analysis, and back testing that can go into an investment plan. Once you have all that out of the way, it’s time to put it to work using real money. For my clients, I use a mix of low-cost ETFs and select mutual funds to create a balanced asset allocation structure. I then allow enough flexibility to reduce risk or capitalize on new opportunities as needed. Each change to the portfolio is made in incremental steps and calculated to ensure we stay on track to meet our goals.
The Bottom Line
Creating a plan of attack for 2016 doesn’t have to be overly complicated. The only certainty is that a successful outcome will require time, tools, and discipline. Investors who spend time on preparation for investing in 2016 will be well equipped to meet nearly anything the market throws their way.
Twitter: @fabiancapital
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Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
